Merriman Market Analyst

Review and Preview

Many stock markets of the world continued higher last week, with several setting new all-time highs, and others setting new multi-year highs. This happened in spite of the highs formed the prior week when Jupiter formed its first of three squares to Uranus, a signature that coincided with an expected decline afterwards. However, the amplitude and duration of that decline was anemic compared to past historical cases. In fact, in the case of the Dow Jones Industrial Average in the United States, there has been no decline of over 4%, or lasting over one week, since the 50-week cycle trough of July 18, 2006. That was 29 weeks ago. I don’t recall this market ever being up this long without a decline lasting more than one week, and at least 4%. To say it is overdue for a decline is an understatement. To continually suggest that a decline is coming whenever we reach a time band of several geocosmic signatures – which historically has corresponded to market reversals in approximately 80% of instances – begins to lose credibility.

So what is the cause of this amazing rally that seems like it will never end? As I stated last week, “Technically, last week looks like another optimal set up for this decline to begin. But fundamentally, this is not the expected season for a major decline to begin, because so much new money typically comes into funds now in the form of retirement accounts. For tax purposes these funds are received in the first quarter of every year, and it is one of the best tax deferments available to Americans. So those monies tend to end up in equities, driving stock prices higher around this time every year now.” OK. That’s a valid fundamental explanation, which very few investors will have trouble accepting.

But astrologers want astrological answers. Here it is not so easy, for I am not aware of any astrologer who called for this prolonged bullishness without a single multi-week decline in 29 weeks. We have to realize that there will be times when fundamental issues will have a more dominant impact upon the market than astrological factors, and even technical factors. It happens. But it would not be wise to assume that therefore there is no correlation between astrology and market behavior. We have seen too often that there is a correlation that cannot be explained any other way. And, in spite of the fact that the stock market has not responded so closely to these geocosmic studies as of late, the same cannot be said about other financial markets. The currency markets, precious metals, energy, and grain markets have reversed beautifully during these projected times of reversals, much as one would expect. It is just the stock market that has been behaving…. oddly.

Perhaps it is Jupiter in Sagittarius. As pointed out in previous columns, Jupiter is the ruler of Sagittarius, and both pertain to the principle of expansion, growth and optimism. Jupiter transits each sign for about one year, and it will remain in Sagittarius until the end of this year. In most previous cases over the past 110 years, this has coincided with bull markets in equities. Or perhaps it is the opposition of Saturn and Neptune, which is in effect August 30, 2006 through June 25, 2007. Saturn rules control and government, and Neptune pertains to manipulation. Could the U.S. government be intervening in the equity markets to artificially keep prices high? It is certainly conceivable under the principles of Saturn and Neptune, especially as they hit natal planets dealing with “money” of top government officials. Or is it just that my own personal judgment on the matter has entered a slump? Well, that’s always possible, for market analysts – like everyone else – have periods of “good judgment” and bad judgment,” as shown by transits to their natal charts. Except in my case, it is only the stock market that has mystified me with its performance since September. I’ve never seen a stock market rally for 29 consecutive weeks without a 4% decline of more than one-week correction. And all of my work is based upon historical probabilities between market prices, cycles, technical; studies, and astrology. Take stocks out of the picture (or even leave it in), and I have been enjoying one of the most profitable trading year’s of my life.

So where do we go from here? As a market analyst who deals strictly in probabilities, I cannot tell readers to give up the idea of a corrective decline. I am not stubborn. It’s just that we are in uncharted waters now, where there have been no cases that I can find readily in which there has not been a correction at this point in a market cycle.

In other markets, Crude Oil rallied smartly last week, as we now approach the critical 60.00 level. This market sprung very well from the 49.90 level of January 18, just two trading days before the Jupiter-Uranus square, as anticipated in this column. Both Gold and Silver continued to soar into Thursday of last week, to their highest level in several weeks, before pulling back on Friday. The same was true with the Euro. All of this fits very well with the astrological factors in place for the past couple of weeks, and sets the stage for explosive breakouts if they can continue above last week’s high. But first, a correction is due here too.

Short-Term Geocosmics

We are now entering the next cluster of geocosmic signatures that have a strong correlation to reversals in many financial markets. On Wednesday, February 7, Venus will conjunct Uranus in Pisces, a level 1 (strongest) signature to U.S. stocks market reversals within 12 trading days (72% probability). On February 8, the Sun will conjunct Neptune, another level 1 signature that has a 79% correlation to primary or greater cycles within 14 trading days. Venus will then square Jupiter on February 9, which is followed by the opposition of the Sun and Saturn on February 10. The later is also a level 1 signature with a 73% correlation to primary or greater cycles within 11 trading days. The conjunction and opposition are very important, for they represent the beginning and the peak of a cycle. Markets could turn within – or very nearby to – this period.

There is astrological cause to think that this could correspond to a crest in the stock market (again). Previously we had stated the importance of the Jupiter-Uranus square. Now this week the first “fast planet” (Venus) translates to that square. It conjuncts Uranus and therefore also squares Jupiter. Sometimes it is the “translation” of a fast planet to the slower moving planets that act as the catalyst for the slower moving planet’s coreelation to a cycle reversal.

Long-Term Thoughts

February will begin the 52nd month of the bull market off the October 10, 2002 4-year cycle trough. There have only been three cases since 1893 in which the stock market has rallied this long following a 4-year bottom. The last time was from August 1982 until August 1987, a rally that lasted 60 months, the longest on record for a 4-year cycle. Following that crest in August 1987, the DJIA fell over 40% in slightly less than 2 months (under a Jupiter-Uranus trine). The time before that was from the 72-year cycle trough in July 1932 through the crest of March 1937. It lasted 56 months, and was followed by a one-year decline where the DJIA lost 50% of its value. So we are in rare territory with this cycle too. The lesson? When markets go up this high and this long, they usually end with a stunning plunge. Everyone says “it can’t happen this time, because the economy and inflation doing so well.” However, stunning and dramatic declines hardly ever have to do with changes in the economy or inflation. They usually begin with flaws in the mechanics of the market itself, such as over-leverage, and once the decline happens, then the economic data starts to turn south too. So it’s the other way around from conventional wisdom. Problems in the markets lead to problems in the economy, not vice-versa. Could there be problems in the market mechanics this year? Sure. After all, Jupiter is in square to Uranus and Saturn is in opposition to Neptune. Surprises and malfunctions, and sudden large losses by hedge finds (or even governments) are very possible this year. And sop will be the3 effort by those entities to cover it up. That’s the nature of Neptune, and that’s the reason why so many cases of manipulation are not discovered right away under this signature. The last time it occurred was in 1971-72, during the Watergate Burglaries. But it wasn’t brought to the public’s awareness until; 1973-74.

Enjoy this run while it lasts. But be smart enough to step aside once the decline starts, because most likely, it will be a stunner.